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If their boxes were true money printing machines, it's confusing to me why they'd bother selling them at all.

by mullingitover 12y ago

sp332 12y ago
It wasn't their money. Customers pre-ordered the machines months in advance.
jwr 12y ago
They built the boxes using their customers' money.
Zikes 12y ago
Quickest means to high starting capital. They had to get as many machines as possible up and running before everyone else did, so they used customers' money like an investment.
- mullingitover 12y ago
  That's what I've heard. It just seems weird that given the glut of VC money these days, they'd have to resort to skulduggery to raise capital for a Sure Thing™.
  - dllthomas 12y ago
    VC money might cost more.
  - wmf 12y ago
    Clearly VCs don't believe that Bitcoin hardware is a "sure thing" if none of them were willing to invest in it.
  - bri3d 12y ago
    Raising capital from a VC for a real Sure Thing would generally be scamming yourself - it would be cheaper to raise a loan in almost all Sure Thing situations. Obviously Bitcoin is a bit different since it's not the kind of real thing you could get a loan for. Anyway, I don't think it's weird at all. Pre-order suckers grant money on much more favorable terms than even a loan, much less a VC. Doubly so if you're scamming them the whole time.
patio11 12y ago
Working capital for hardware production. The estimate often quoted is that a production run of ASICs costs $1 million and people who can green light them will accept a variety of payment methods like a) a wire paid in advance and b) see a. Many companies which previously sold ASICs, particularly those in China (which is slightly advantageous for developing a close relationship with the supply chain necessary to build ASICs to order), have squirreled away their profits from selling boxes wholesale/retail, done this math, stopped selling boxes, and now do entire production runs and operate them for their own benefit. This is one of the primary things driving the network's hash rate through the roof. A data center of consistent hardware operated by experts absolutely ROFLstomps (on any efficiency metric) versus making consumerized versions of that hardware, losing 50% to the wholesale/retail discount, and then having that consumerized hardware get operated as a cloud made manifest in enthusiasts' spare bedrooms.
dllthomas 12y ago
They're selling an option for bitcoins denominated in electricity. It can potentially make sense for them to let someone else take that risk, and still make sense for someone else - in a different situation - to take it. Which isn't to say that is necessarily the situation here.

If their boxes were true money printing machines, it's confusing to me why they'd bother selling them at all.

sp332 12y ago

It wasn't their money. Customers pre-ordered the machines months in advance.

jwr 12y ago

They built the boxes using their customers' money.

Zikes 12y ago

Quickest means to high starting capital. They had to get as many machines as possible up and running before everyone else did, so they used customers' money like an investment.

mullingitover 12y ago
That's what I've heard. It just seems weird that given the glut of VC money these days, they'd have to resort to skulduggery to raise capital for a Sure Thing™.
- dllthomas 12y ago
  VC money might cost more.
- wmf 12y ago
  Clearly VCs don't believe that Bitcoin hardware is a "sure thing" if none of them were willing to invest in it.
- bri3d 12y ago
  Raising capital from a VC for a real Sure Thing would generally be scamming yourself - it would be cheaper to raise a loan in almost all Sure Thing situations. Obviously Bitcoin is a bit different since it's not the kind of real thing you could get a loan for. Anyway, I don't think it's weird at all. Pre-order suckers grant money on much more favorable terms than even a loan, much less a VC. Doubly so if you're scamming them the whole time.

patio11 12y ago

Working capital for hardware production. The estimate often quoted is that a production run of ASICs costs $1 million and people who can green light them will accept a variety of payment methods like a) a wire paid in advance and b) see a. Many companies which previously sold ASICs, particularly those in China (which is slightly advantageous for developing a close relationship with the supply chain necessary to build ASICs to order), have squirreled away their profits from selling boxes wholesale/retail, done this math, stopped selling boxes, and now do entire production runs and operate them for their own benefit. This is one of the primary things driving the network's hash rate through the roof. A data center of consistent hardware operated by experts absolutely ROFLstomps (on any efficiency metric) versus making consumerized versions of that hardware, losing 50% to the wholesale/retail discount, and then having that consumerized hardware get operated as a cloud made manifest in enthusiasts' spare bedrooms.

dllthomas 12y ago

They're selling an option for bitcoins denominated in electricity. It can potentially make sense for them to let someone else take that risk, and still make sense for someone else - in a different situation - to take it. Which isn't to say that is necessarily the situation here.